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Government must keep its promise to SMEs says FSB

26 February 2019

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In 2017, the Conservative party made a manifesto promise to give firms that employ those from disadvantaged groups a one-year national insurance holiday.

The Federation of Small Businesses (FSB) is now calling on the government to make good on its pledge as it publishes a new report that demonstrates the positive role that SMEs play in their local communities.

The report, Small business, big heart, shows that the majority (80%) of small firms are contributing to local charities or the wider community in some way, with 38% donating their time and 32% providing skills, wider resources or mentoring to others.

Small employers are already more likely to hire those from harder to reach groups than big corporations. The considerable majority (78%) employ an older worker, a third (34%) have a member of staff with low levels of educational attainment and a similar share (30%) employ at least one person with a known disability or mental health condition.

To increase this activity and better support small businesses, the FSB is calling on the government to honour its manifesto promise.

"The contribution of small businesses to local communities is too often overlooked by policy-makers," said FSB national chairman Mike Cherry. "We're not just generators of profits and tax: we're an active force for good in society.

"Those who are disadvantaged are already more likely to find work with a small firm than a big corporation. Back in 2017, the Conservatives promised that - were they elected - they would introduce a one-year NICs holiday for firms that take on those with a disability, mental health condition or who have been out of work for some time.

"We've been left asking: when will this promise be delivered? Two years later, it should be prioritised. We look forward to the chancellor outlining exactly how the commitment will be taken forward in the upcoming Spring Statement."

The FSB report highlights the support provided by small businesses for young people. More than four in ten (42%) small employers actively engage with schools, colleges or youth organisations. A similar proportion (41%) offer work experience.

Cherry said: "We need to ensure that young people are work-ready when their education finishes. That means giving them exposure to the business world at an early age. It's high time for the government to do more to enable work experience in small firms."

The study also flags up the cost of ill-health to small firms. More than a third (34%) of SMEs say sickness absence has cost them over £1,000 in the past 12 months. The FSB is calling on policy-makers to allow employers to recoup some of the costs from long-term staff absences, drawing on the precedent set by the Percentage Threshold Scheme (PTS). Shelved in 2014, the PTS allowed firms to reclaim a share of Statutory Sick Pay if their SSP expenditure exceeded a set percentage of their total national insurance bill.